[OPE-L:5306] Re: x+a = revenue

Ajit Sinha (ecas@cc.newcastle.edu.au)
Tue, 24 Jun 1997 08:23:50 -0700 (PDT)

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>In any case, Ajit's binary opposition between the accidental short run and the
>steady growth of the long run is false, as is the implication that, once we
>get to the "long run," surplus-value must always be greater than revenue. His
>comments evince a lack of awareness of economic cycles (and, in general,
>anything other than momentary accidents and long run equilibria). Consider
>the following difference equation system, in which W[t] indicates the total
>value of year t,
>W[t+2] = 1.5*W[t+1] - W[t] + 13*(1.02)^t,
>in which the value of output is a constant 10/9ths of the value of
>(circulating) capital consumed during the year (W[t] = (10/9)*C[t]), and in
>which the initial conditions are W[0] = 30 and W[1] = 33.
>Revenue at the end of year t is R[t] = W[t] - C[t+1]. Surplus-value of year t
>is S[t] = W[t] - C[t]. Looking at the first 100 years (0-99), revenue exceeds
>surplus-value in 37 of them: 2-4, 10-13, 19-22, 28-30, 36-39, 45-48, 54-56,
>63-65, 72-73, 80-82, 89-90, 98-99. Yet *on average*, surplus-value exceeds
>revenue (by 1.43 per year, on average) and the average year-to-year growth
>rate of W is 2.04%.
>Andrew Kliman

This is the "difference equation system" Andrew is so proud of that he is
not going to let me live in peace until I prove the sillyness of it to him.
So here we go!

Andrew defines R[t] = W[t] - C[t+1]
which means revenue in 1997 is equal to total value produced in 1997 minus
the total circulating capital that WILL be used in 1998. Now total value in
1997 is defined as 10/9 times the total value of circulating capital in
1997. In this whole equation system, the circulating capital is taken as
independently given. There is no equation that determines it from some given
variables for even the current year let alone for future. Now, only a
clairvoyant could tell what would be the total circulating capital that
would be used up in the next year. And unless you are a clairvoyant, you
have no way of knowing what is the revenue in the current year. Now, only
God could know how those numbers have been generated by his equations. Now,
do I have to get into the arbitrariness and meaninglessness of his equation?
I don't think so.

Recently he has come up with another "difference equation". This time it is
a price equation. Even though it has been proven by me that his so-called
dynamic price system is an absurdity, he is sticking by it. But the most
interesting part of all this is that it is produced to refute my basic point
that if you keep consuming your capital base, then in the long run you would
run down the system to the ground. This is a question of negative GROWTH of
the economy. Instead of producing a growth equation, Andrew produces his
silly price equaion to refute my point. He does not even understand the
terms of he problems, even when the problem is first raised by himself. How
can he interpret complicated theoreticians like Marx? If bravado and
bombastic rhetoric was all Marxism needed at the end of the millennium,
then, of course, Andrew is doing a good job. But if we think that we do need
some serious work in Marxist theory at this juncture, then I think Andrew is
wasting his time as well as others.

Cheers, ajit sinha